Research indicates many employers abroad opt to give a cash lump sum for employee benefits, which is often not ideal.
- Over 80% of employers with overseas staff are providing cash lump sums instead of specific benefits.
- The practice of offering cash for benefits presents risks for both employers and employees abroad.
- Employers struggle with economy of scale and compliance when offering cash instead of organized benefit plans.
- Employees lack the expertise to choose beneficial coverage, risking poor choices and non-compliance.
A recent study has highlighted that a significant proportion of employers managing international teams are opting for a cash lump sum approach when it comes to benefits. Specifically, 83% of these employers provide a cash lump sum for employees to select their own benefits. However, this method is cautioned against due to the possible exposure to unforeseen risks by both parties involved.
From an employer’s perspective, failing to utilize the economic advantage of group schemes can lead to higher expenses. Individual purchases of healthcare services often cost more than arrangements made on an organizational level, making the cash lump sum approach potentially more expensive for businesses. Additionally, maintaining a duty of care becomes challenging when employees are left to navigate their benefit choices without expert guidance. This can negatively impact the employer’s ability to attract and retain talent, a key factor in managing overseas assignments.
For employees, the risks are equally daunting. There is the possibility of non-compliance with local visa requirements, such as mandatory insurance policies in certain regions. An employee may unknowingly forgo essential coverage, such as dental insurance, which could lead to overwhelming expenses for medical treatment. Without the necessary expertise, selecting appropriate benefits can be an overwhelming task, compounded by the potential lack of critical communication from the employer about available health and wellbeing resources.
Sarah Dennis, a leader in international employment benefits, emphasizes the importance of seeking expert advice. “International employee benefits is a specialist area and it is best to take expert advice to ensure both the employer and the employee are properly protected,” she advises. This approach not only ensures the needs of employees are met but also aligns with broader business interests.
Expert guidance is essential for both employers and employees to adequately navigate international benefit schemes.
